With loan rates as low as possible, the share of loan insurance increases automatically and represents almost 40% of the total cost of credit. In order to reduce this expense, the delegation of insurance appears as the solution.
An important part of the total cost of credit
The current environment allows borrowing with borrowing rates that have never been so low. Never in history, to borrow will have cost so little. At an average rate of 1.29% for all periods combined, according to the Housing Credit Observatory / CSA, these rates are truly advantageous for borrowers.
Nevertheless, the borrower insurance that accompanies any mortgage loan subscription has a fixed cost. In other words, whether the rates are low or high, the insurance generates the same cost. But the lower the rates, the higher the insurance share in the total cost of the loan. From now on, insurance accounts for nearly 40% of the interest due to the bank when subscribing to a mortgage. In order to reduce the weight of the borrower’s insurance, it is necessary to look at the delegation of insurance.
The borrower insurance delegation
By subscribing to a mortgage, the lending institution will offer its group insurance, a collective offer where the risks are pooled according to the age of the borrower. However, since the introduction of the Lagarde law in 2010, borrowers are free to choose the mortgage insurance of their choice.
Thus, this operation named delegation of insurance makes it possible to compare the different offers and to benefit from personalized, advantageous and competitive rates, calculated according to the profile and the amount of the mortgage to be insured. The lending institution can not refuse a request for a delegation of insurance. However, the guarantees of the insurance in delegation must be at least identical to those proposed initially. In any case, a refusal from the lending institution must be justified in writing.
Finally, to enable borrowers to compare insurance offers regularly, a system was introduced in 2014 by the Hamon law. This authorizes debtors to change their home loan insurance policy in the first year of their loan and then on each anniversary date using the Bourquin amendment, which introduces the annual cancellation of the borrower’s insurance.